Uber unveils promising SA lease option
That you can catch a ride within minutes of touching a screen – an almost unheard-of convenience – is something that South Africans have come to love.
But, for all its popularity among users since it was launched in this country, the enormously successful mobile app Uber is facing dissent from its drivers in other parts of the world. In California and London, drivers are taking on the company over labour matters.
The firm does not expect to face similar problems in South Africa, according to Alon Lits, the regional general manager of Uber in sub-Saharan Africa, because of the flexibility it offers drivers and the opportunities it provides for people who want to work for themselves.
In a country where unemployment is 25.5%, Uber has been hailed as an innovative income creator and a boost to entrepreneurship.
But the company has had run-ins with the metered taxi industry in South Africa.
Since it was launched locally in 2013, Uber has grown rapidly. It has more than 2 000 “partner” drivers and plans to expand this number to 15 000 in the next two years.
Last week, the company, in partnership with the vehicle finance provider, WesBank, launched a programme to help to turn drivers into their own bosses.
The Uber vehicle solutions programme will allow Uber drivers, who may not otherwise get traditional credit, to qualify for a full vehicle maintenance lease.
With WesBank able to use the data available from Uber, such as a driver’s mileage, earnings record and rating from passengers, it gets around common problems of providing finance to people without a credit history.
Access to finance remains a serious problem for many people. WesBank’s chief executive, Chris de Kock, says that, out of every 100 applications for finance, more than 60 are turned down. “We don’t have a strongly credit-active population in this country,” he said.
This applies to many drivers in the Uber network who may have been working in low-skilled or menial jobs or who may be employed for the first time.
Through Uber, the bank can see what mileage a driver does and at what rate they will be earning.
“We have satisfied ourselves that that income will be sufficient to service the rental on the vehicle that we provide,” said De Kock.
The financing for the lease programme is done on a cents-per-kilometer model, which allows drivers to pay more when times are busy and the vehicle is doing more mileage, and less when business slows down, says De Kock.
According to Wesbank, a qualifying driver who travels 5?000km in a month can expect to pay from R1?710 a week for a full lease, which includes insurance, maintenance and telematics. The term runs for 36 months.
In this way, many drivers who drive a car owned by someone else will have the opportunity to become their own bosses.
The driver’s performance under the lease agreement will also be translated into traditional credit history, which can then be used to apply for other finance, such as car or home loans.
Lits said at the launch the company believes this could improve the earning power of drivers by anywhere between R2 000 and R4 000 a month. But this does depend on several variables, including when drivers choose to work and how long they work for.
“One of the big reasons why drivers love partnering with Uber is because they have that ability to be their own boss. No one’s setting their hours for them, no one’s telling them where to be and when to be there. They love that flexibility.”
Uber is confident of a rapid uptake of the lease programme for this reason, Lits said. “Drivers want to be their own CEOs [chief executive officers], run their own businesses and grow their own businesses.”
Despite the pressure Uber faces over labour issues in other countries, Lits said the company does not expect problems here.
Yet the local metered taxi drivers, like those in other countries, have objected to the ease with which Uber has entered the industry, particularly over regulations.
Lits said the company had held a number of meetings with relevant stakeholders and policymakers on a city, provincial and national level.
He said the regulators had provided clarity on how Uber driver-partners should be licensed until a regulatory framework could be developed.
In the United Kingdom, a handful of Uber drivers are challenging the company to provide the minimum rights workers are entitled to under British law, according to Nigel Mackay, a solicitor at the legal firm Leigh Day, which is representing drivers. These rights include a minimum wage, paid leave and the right to take rest breaks.
“Uber currently argues that its drivers are effectively self-employed,” said Mackay.
“We believe that, because of the way Uber operates and, in particular, because of the control it exerts over its drivers, they should have the status of workers.”
The UK employment tribunal is likely to hear the case in the first half of next year.
The case is important because it will test “how long-standing employment rights apply to modern tech companies”, said Mackay.
“It is likely that more companies will operate in this way in the future and we think it is essential that individuals who work for them have the same rights as everyone else.”
In California, Uber is appealing a judge’s decision to allow drivers to bring a class-action lawsuit against the company over whether they should be classed as employees.
Uber is not the only, and is unlikely to be the last, technology firm that offers a service that leapfrogs regulation.
Paul Browning, a South African public transport analyst at Transforum Business Development, said, judging by the response of users, Uber’s arrival has been a good thing. But things that are good for the individual or a group are not necessarily good for everyone.
Regulations are there to impose standards on service providers but new ideas sometimes catch the regulators off-guard, Browning said, as the stand-off with the metered taxi industry earlier this year shows.
Uber has shown how new technology can offer a far more demand-responsive service than the metered taxi industry, said Browning. However, “we get a situation where hard cases make bad law. And those who have conscientiously complied with the regulations, often at some cost, might be legitimately unhappy at newcomers finding legal loopholes to enter their service section.
“But does it unfairly ignore regulations such as those imposed by labour legislation? he asked.
“The jury is still out on that.”